Dental Benefits 101
January 30, 2008
Presenter: Sara Zook
Today’s Topics
A Brief History Description of Types of Plans
• Indemnity
• HMO
• PPO
Network Considerations Reimbursement Differences
A Brief History
A Brief History The dental benefits industry in the U.S. began
as a by-product of the health insurance industry.
1954- Nation’s First Dental Plan- Washington State Dental Service Corporation.1
In 1962, 1 million people (less than 1% of U.S. Population) were covered by dental benefits.2
By 1999, 153 million individuals (56% of U.S. Population) had some type of dental benefits.2
(1) Journal of Dental Education, Future Trends in Dental Benefits, 2005 69: 586-594
(2) Mayes, Donald S., Dental Benefits: A Guide to Dental PPOs, HMOs and Other Managed Plans, Revised Edition: 2002.
Dentists Practice Differently
Most Dentists practice individually• MDs- 35% practice individually1
• DDS- 76.6% practice individually2
Dentists do not require hospital privileges
What does this mean?
(1) Medical Economics, “Do you have the right stuff to go solo?,” Jan. 8, 2001; (2) Journal of Dental Education, Association Report: Trends in Dentistry and Dental Education, June 2001
Dental Cost Pressures Are Increasing
Lost work time• Over 164 million work hours (approximately 20.5 million days) and
51 million school hours (approximately 7.8 million days) are lost each year due to dental problems1
• Production time lost due to off-the-job injuries totaled about 170 million days; 80 million days were lost by workers injured on the job2
Emergency room costs• People in the 19 – 35 age group have more emergency room visits
for dental emergencies than medical emergencies3
• 80% of dental-related emergency room discharges receive prescription for at least one medication3
(1) U.S. Department of Health and Human Services. Oral Health in America: A Report of the Surgeon General. Rockville, MD: U.S. Department of Health and Human Services, National Institute of Dental and Craniofacial Research, National Institutes of Health, 2000; (2) Injury Facts 2003 Edition, National Safety Council; (3) Lewis, Charlotte, MD, MPH, Lynch, Heather MD, and Johnston, Brian, MD, MPH, Dental Complaints in Emergency Departments: A National Perspective, Annals of Emergency Medicine, Volume 42, Number 1, July 2003
Indirect costs of dental problems
Types of Plans
Types of Coverage1
Capitated Dental Plan Pure DHMO
• Dentist paid on a per capita basis, fixed rate for each individual or family enrolled.
• Participant must see a DHMO dentist for coverage. • Typically smaller networks. • Copay schedules.
Fee-For-Service Dental Plans Indemnity
• Reimbursement based either on a schedule or UCR. • No network.
PPO• Network of dentists agreeing to accept a discounted level of payment for
covered services. • Out of Network option, plan design/carrier determines reimbursement level. • Typically larger networks.• Uses coinsurance.
(1) Mayes, Donald S., Dental Benefits: A Guide to Dental PPOs, HMOs and Other Managed Plans, Revised Edition: 2002.
Dental Plan Trends
15.1
60.5
40.8
5154.2
58.9
54.360.7
6569.7
80.2
26.623.7 23.5 23.6 23.2
11.611.911.313.2
0
10
20
30
40
50
60
70
80
90
2000 2001 2002 2003 2004
Indemnity Plans
PPO Plans
DHMO Plans
Access/Discount Plans
(1) National Association of Dental Plans. 2005 Joint Dental Benefits Report, Enrollment, July 2005; (2) The significant decline in Access/Discount plans between 2000 and 2002 was impacted by the removal of some health plans previously in this category that included a limited dental benefit.
PPOs are the only segment with significant growth over this four-year period1
Plan Design Components
Coinsurance Plan maximums
• Annual Max and Orthodontia Lifetime Max
Deductibles Allocation of services
• Preventive (Type A/I): Cleanings, Routine X-rays
• Basic Restorative (Type B/II): Fillings, Periodontics, Oral Surgery, Endodontics
• Major Restorative (Type C/III): Crowns, Bridges/Dentures
Contractual Limitations and Exclusions
HMO- A Sample Plan Design
Deductible $0
Preventive $0
Basic Restorative
(i.e. fillings)
Copay Schedule, ranges from $20-$90
Major Restorative
(i.e. crowns)
Copay Schedule,
ranges from $350-$475
Orthodontia $2,500-$3,900
Annual Maximum None
Indemnity Plan Design
TYPE OF SERVICE (% R&C)
A (Preventive) 100%
B (Basic Restorative) 80%
C (Major Restorative) 50%
D (Orthodontics) 50%
PPO Plan Designs – “Classic” Plan
TYPE OF SERVICE
IN-NETWORK (% PDP fee)
OUT-OF-NETWORK (% R&C)
A (Preventive) 100% 100%
B (Basic Restorative)
80% 80%
C (Major Restorative)
50% 50%
D (Orthodontics) 50% 50%
PPO Plan Designs – “Maximum Allowable Charge (MAC)” Plan
TYPE OF SERVICE
IN-NETWORK (% PPO fee)
OUT-OF-NETWORK (% PPO fee)
A (Preventive) 100% 100%
B (Basic Restorative)
80% 80%
C (Major Restorative)
50% 50%
D (Orthodontics) 50% 50%
This plan is not available in every state on a fully insured basis. Please check with an advisor prior to offering.
PPO Plan Designs – “Incentive Plan”
TYPE OF SERVICE
IN-NETWORK (% PPO fee)
OUT-OF-NETWORK (% R&C)
A (Preventive) 100% 80%
B (Basic Restorative)
80% 60%
C (Major Restorative)
50% 30%
D (Orthodontics) 50% 50%
This plan is not available in every state on a fully insured basis. Please check with an advisor prior to offering.
PPO Plan Designs – “Incentive MAC Plan”
TYPE OF SERVICE
IN-NETWORK (% PPO fee)
OUT-OF-NETWORK (% PPO fee)
A (Preventive) 100% 80%
B (Basic Restorative)
80% 60%
C (Major Restorative)
50% 30%
D (Orthodontics) 50% 50%
This plan is not available in every state on a fully insured basis. Please check with an advisor prior to offering.
No coinsurance differentials are permitted: No distinction can be made in- and out-of-network coinsurance / benefit
Size of differential is restricted: Size of coinsurance / benefit differential in- and out-of-network is limited
Coinsurance / benefit differentials are permitted: These states are silent on the subject of coinsurance / benefit differentials
Oregon
Montana
Idaho
Wyoming
North Dakota
South Dakota
Minnesota
Nebraska
Kansas
Oklahoma
Texas
New MexicoArizona
UtahNevada
California
Colorado
Iowa
Missouri
Arkansas
Louisiana
Mississippi
Alabama
Tennessee
Georgia
Florida
South Carolina
North CarolinaKentucky
OhioIndiana
Illinois
Michigan
Wisconsin
West Virginia Virginia
Pennsylvania
New York
New Jersey
Maine
VT
NHMA
CT
Rhode Island
DelawareMarylandWashington DC
Extraterritorial states include:MA, MS, MT and TX.
Washington
STATE LIMITATIONS ON INSURED PLANSCOINSURANCE DIFFERENTIALS
Allocation of Services
Orthodontic diagnostics
Orthodontic treatment
By reallocating these services, you could save 11%*
*Percentage indicates plan savings off of MetLife’s full block of self-funded/insuredPPO plans based upon analysis of MetLife’s 2004 book of business.
Type CProsthodontics
Inlays/onlays Crowns Dentures Bridges Implants Endodontics/
root canal Periodontics–surgery Oral surgery Simple extractions Surgical extractions
Type DOrthodontics
Type BRestorative
Fillings Repairs Periapicals Pulp capping/
pulpal therapy Endodontics/root canal Space maintainers Palliative care Periodontal maintenance Periodontics Rebases/relines Simple extractions Surgical extractions Oral surgery General anesthesia Consultations
Type APreventive & Diagnostic
Oral exams Full mouth X-rays Bitewing X-rays,
periapicals & other X-rays
Lab and other tests Prophylaxis (cleaning) Fluoride treatments Space maintainers Palliative care Sealants
Note: Options may be subject to state regulations.
Type A, B, C & D covered services
Potential savings of 3.5 – 5%*
*Range indicates plan savings off of MetLife’s full block of self-funded/insured PPO plans based upon analysis of MetLife’s 2004 book of business.
Fluoride ageOnce per 12 months
Space maintainer ageOnce per lifetime
Periodontal maintenanceCombined with cleaning
Prosthodontic services
Sealant ageOne per 60 months
Fillings
R&C Percentile
ImplantsOne per 60 months
Up to age 14
Up to age 14
2 per year
1 in 10 years
Up to age 14
1 per 24 months
80th
Not covered
More RobustMore Robust Lower CostLower CostAlternativesAlternatives
Up to age 19
Up to age 19
4 per year
1 in 5 years
Up to age 19
No limit
90th
Covered
Note: Options may be subject to state regulations.
Limitations and Exclusions
• If the Current Contract Is “Open,” Is the Quote “Closed”?Estimated Price Impact = 1% to 3%
• Does the Quote Include Asymptomatic or Naturally Functioning Tooth Limitations? If So, How Are They Applied?Estimated Price Impact = 2% to 3%
• Are All Endo., Perio. and Oral Surgery Services in One Category (e.g., Type B) or Are They Split Among Categories (e.g., Type B & C)?Estimated Price Impact = 5% to 25% (8% if 100/80/50)
• If the Current Plan Is R&C Based (out-of-network), Is the Quote R&C Based? Is R&C Calculated the Same Way?Estimated Price Impact = 0% to 20%
SOURCE: Estimates are based on MetLife data.
Other things to look for
– Oral Examination – Oral Examination (hard/soft 6 months?)(hard/soft 6 months?)– Fluoride Treatment – Fluoride Treatment (consecutive months?)(consecutive months?)– Prophylaxis (cleaning) – Prophylaxis (cleaning) (combined w/ Perio.?)(combined w/ Perio.?)– Sealants – Sealants (per tooth; per lifetime?)(per tooth; per lifetime?)– X-Rays – X-Rays (bitewings only / consec. months?)(bitewings only / consec. months?)
– Oral Surgery – MinorMinor Oral Surgery– Fillings – Fillings (replacement limits?)(replacement limits?)– Endodontics – X-Rays X-Rays (all other / limits?)(all other / limits?)– Periodontics – Endodontics (pulp caps)(pulp caps)
– Periodontics (non-surgical / limits?)(non-surgical / limits?)
– Prosthetics – Endodontics Endodontics (root canal therapy)(root canal therapy)(bridges, dentures) – Periodontics Periodontics (combined surgical limits?)(combined surgical limits?)
– Crowns, Inlays, Onlays – Complex Oral Surgery Complex Oral Surgery ((asymptomatic tooth exc.?)asymptomatic tooth exc.?)– Prosthetics (bridges, dentures)
(naturally functioning tooth exclusion?)(naturally functioning tooth exclusion?)– Crowns, Inlays, Onlays (Implants / Alt. Benefit?)(Implants / Alt. Benefit?)
Type I – Type I – PreventivePreventive
Type II – BasicType II – Basic
Type III – MajorType III – Major
What You See What You May Get
Closed or Open List?Closed or Open List?
Adding it all together…
Multi-Option Strategies
A recommended dual-option approach:
• Cover the same services in both plans
• Design differences including:– Both plans should be attractive to the entire population to help avoid
adverse selection
– Low plan should include greater cost sharing features
• Lower plan must deliver significant value at an attractive price
Promote high participation and maximize participation in each plan to avoid adverse selection
Voluntary Strategies
A recommended approach:
• Plan design:– Focus on preventive and diagnostic services
– Primary allocation of services
– Greater degree of cost sharing for major services
– Two-year participant plan selection lock in/lock out
Promote high overall participation by keeping rates attractive to most employees (high and lower utilizers)
Retiree Strategies
A recommended approach:
• Plan structure– Offer coverage to individuals who have had coverage as an
active employee
– Pension deducted payments
• Plan design– Focus on coverage designed to maintain oral health
Promote participation through one open enrollment opportunity, no late entrants
Reimbursement Differences
Types of Reimbursement PPO Fee
• Discounts can vary widely, especially when multiple networks involved
• Can be used as reimbursement both in and out of network
• Discounts are sometimes applied to non-covered services, amounts above the maximum, etc.
R&C/UCR• The administrator’s determination of an out of network
average/reimbursement. Separate fee schedules for General Dentists and
Specialists• Services performed by a specialist (i.e. Perio, Endo, Oral
Surgery) at a rate of 70%
R&C (Reasonable & Customary), UCR (Usual, Customary, & Reasonable)
For example, MetLife uses the lesser of three things:• The dentist’s Actual submitted charge
• The dentist’s Usual charge
• Customary Charge (geographic area)
Customary Charge based on a percentile (51st, 70th, 80th, 90th, 99th)
Reasonable & Customary- Variances
One administrator’s 90th percentile may not necessarily equal another’s• Differences in definition of geography
• 3-digit zipcode
• Region
• State
• Use of only In Network Charges to determine percentile vs. All submitted charges• Using “In Network Only” leads to lower
reimbursement out of network
Network Considerations
What Is the Goal of a Dental Network?
To be effective, a network needs to accomplish four essential things:
• Lower benefit plan costs
• Increase plan participant satisfaction
• Promote a healthier, safer environment for patient care
• Enhance dental practice efficiencies
Retention: What is Turnover?
Two types of turnover• Voluntary
• Involuntary What is a reasonable amount of
turnover? (5%, 2% is ideal)• Turnover rate for individual PPO dental offices
was 9.0%*• PPO general dentists was 7.9%*
• PPO specialists was 4.7%*
*NADP, 2004 Dental Benefits Report on Network Statistics, August 2004 (dentists or offices that left a network from 01/01/03 through 12/31/03
Questions?